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An all-equity firm is considering the following projects: Project Beta IRR W .80       9.3 %...

An all-equity firm is considering the following projects:
Project Beta IRR
W .80       9.3 %
X .90       11.4
Y 1.10       12.1
Z 1.35       15.1
The T-bill rate is 4 percent, and the expected return on the market is 12 percent.
a. Which projects have a higher expected return than the firm’s 12 percent cost of capital?


b. Which projects should be accepted?


c.

Which projects will be incorrectly accepted/rejected or correctly accepted/rejected if the firm's overall cost of capital were used as a hurdle rate?

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jeff jeffy answered 1 month ago
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